3 Tips on How to Pay off Credit Card Debts
Debts are a headache because they prevent flexibility in money management. So getting rid of them as soon as possible or at least minimizing them will help you make the most of your cash to achieve greater financial security.
Having control over money becomes complicated when using a credit card, mainly because they are not used correctly. The credit card is a payment method that facilitates purchases of a product or service immediately and that otherwise would be difficult to acquire. That is to say, used correctly they are an immediate help but become a double-edged sword when we believe that this help is money available in our bank accounts.
When using a credit card a credit history is formed that makes it easier to achieve goals such as buying a house, a car or opening your own business, but when the card begins to have a history of doubts this credit history becomes a negative aspect for financial institutions that lend credit because they determine that the applicant does not pay its debts and therefore is an undesirable user for a larger credit.
Pay off your debts easily
Pay off your credit card debts quickly with these tips:
1. Debt consolidation
Debt consolidation is the grouping of similar debts (such as credit cards) into a single monthly payment. The objective of simplifying or reducing payments, since by consolidating, the minimum monthly payment will be much lower than the sum of the payment of all your debts. This is because it is concentrated in a single account with a lower interest rate. A second advantage is that this strategy helps you have better control and management of your finances.
Consolidate your credit card debts yourself by using a transfer credit card to pool all balances.
2. Debt restructuring or refinancing
Restructuring your credit card debt involves 3 things:
- Asking the financial institution for an extension of the term of your debt payment, to pay less each month although this would increase the interest.
- Decrease the interest so that the debt payment time is shortened. This implies that you pay more each month. This restructuring helps to get out of debt quickly, especially for people who are looking to improve their credit history so that non-payments are not reflected.
- Ask the financial institution for a fixed payment plan with a reduction of interest. But you must commit to pay your debt on time to reduce it quickly without accumulating interest. If you are looking to restructure your credit card debt, go directly to your financial institution.
3. Request for debt reduction
When you have problems paying off credit card debts, there is the possibility of requesting the financial institution to reduce your debts. The advantage is that you pay less than what you owed. The disadvantage is that it reflects negatively on your credit history, making it difficult to access new credit. It is one of the last options to pay off a debt.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.